Fraud, Phishing, and 419 Scams

Overview

Fraud is, unfortunately, a sad part of doing business both online and offline. The global and relatively anonymous nature of online business, though, makes it much easier for fraudulent activity (especially that originating from overseas) to occur.

The following describes the various types of fraud DreamHost sees regularly and explains what can be done to help prevent it.

If you believe that a DreamHost customer is engaging in fraudulent activity, feel free to skip the 'Reporting fraudulent activity to DreamHost' section below.

Types of fraudulent activity

DreamHost encounters various types of fraudulent activity on a regular basis. Here are some of the more common varieties.

Fraudulent sign-ups

This occurs when someone uses false information and (usually) a stolen a credit card in order to signup for a DreamHost account. While DreamHost does have a number of protections in place to prevent this from occurring, occasionally some will slip through. DreamHost usually catches these down the road—they often engage in other types of fraud once they are on DreamHost servers—though sometimes it is only found out after the true owner of the stolen credit card used to sign up contacts DreamHost.

Phishing

This occurs when a customer creates a fake web site (usually a bank, an eBay/Paypal login screen, and so on) in an attempt to fool people into entering their sensitive information into a web-based form. Such information may include a login name and password, a credit card number, and so on. These are then collected by the criminal for their own use. Victims are typically directed to the site via spam email designed to appear to be coming from a bank, eBay, and so on.

Some of these phishing sites and emails are quite convincing in appearance. For that reason, it is advised that you never follow a link contained within an email purporting to be a bank or transactional site such as eBay—no matter how convincing it looks. Such institutions, if you ask, will give you the same advice. Instead, visit a site directly by typing its true URL into your web browser.

Pump and dump schemes

This is a form of fraud where criminals send large volumes of spam in order to hype a stock (typically a penny stock), usually citing some sort of "breakthrough" or upcoming product announcement. Recipients of the email are encouraged to buy the stock and achieve a windfall. The true purpose of the scam is to artificially inflate the value of the stock after the criminal has purchased at a lower price so that they may sell it at a profit. In the end, those who bought the stock at the direction of the criminal hold an over-valued stock which drops in value shortly thereafter.

Advance fee scams

There are various types of advance fee scams. Below are a few of the more common varieties.

419 scams

The 419 scam was named after the Nigerian criminal code this type of fraud violates (Nigeria is where the scam originated and is often practiced).

The scam works like this: the victim receives an email from someone (often a prominent person from an African country) asking them to help move some large sum of money out of the country. In exchange for their help, the victim is promised some percentage of the money transferred. At some point, the victim is asked to send the criminal a certain amount of money to facilitate the transaction, after which the criminal is never heard from again. Variations on this include references to the victim receiving a large inheritance, winning a lottery (with a significant "administrative fee"), and so on.

Escrow/shipping scams

Escrow and shipping scams are actually a common variation of the advance fee 419 scam mentioned above.

In these scams, the criminal posts for sale a high value item (e.g., a motorcycle, laptop, or TV) for an unusually low price, often though eBay. When potential buyers put in a bid, they are asked to instead pay via an escrow service of the seller's choosing in order to lower the cost of the transaction (cheating eBay out of their cut in the process, with the victim's greed taking precedence).

Of course, this escrow service does not actually exist and instead is a fake web site created by the criminal. The buyer is directed to wire their payment to the false escrow service, after which neither the escrow service nor the seller are ever heard from again. A variation of this works the same way, except that the criminal creates a fake shipping-company website instead.

False storefront scams

These are another common variation of the advance fee 419 scam, wherein the criminal create a fake storefront with incredibly under-priced goods for sale. The buyer is instructed to send their payment, often via wire, to the criminal. Once the payment is sent, the seller is never heard from again and the site is taken down.

Employee scams

One last common type of advance fee 419 scam is the employment scam, which works like this: the victim is sent an email from a company or employment service expressing interest in employing them. If the victim expresses any interest, the criminal asks them to wire an administrative fee of some kind. Once the funds are sent, the so-called employer is never heard from again.

Termination

DreamHost reserves the right to terminate any account found to be engaging in fraudulent activity at any time, with or without prior notice.

Reporting fraudulent activity to DreamHost

If you believe that fraudulent activity is occurring in conjunction with a DreamHost account, contact DreamHost and let an abuse support rep know. Please provide as much detail as possible.

If the fraudulent activity involved the use of email, please be sure to include the full headers and content of that email as well.

If your credit card was fraudulently used to sign up for a DreamHost account, please provide the first 2 and last 4 digits of the card, name, date, and the amount of the transaction.